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Carbon Credits: Glossary of Terms

carbon credits faqs

Additional Offsets - Carbon offsets that would not have occurred without the offset project. (one of four criteria to look for when purchasing carbon offsets)

Cap-and-Trade - A regulatory process that places a "cap" on the greenhouse gas emissions industries are allowed to produce. Companies that come in under the cap are entitled to "trade" (i.e., sell) their leftover emission allowances to other companies that have exceeded their limit.

Carbon Allowances - Permits (credits) to emit greenhouse gases for members of a regulated carbon market.

Carbon Calculator - An on-line tool used to determine your carbon footprint, based on your home energy use, driving and flying habits, food, waste, recycling and more.

Carbon Credit - Value assigned to a reduction or offset of greenhouse gas emissions; a generic term for any tradable certificate or permit representing emissions reductions equaling one ton of carbon dioxide or carbon dioxide equivalent.

Carbon Cycle - The Earth has a natural carbon cycle that has maintained the perfect balance of carbon dioxide in the air for 650,000 years - approximately 275 parts per million (ppm). We know this by analyzing the content of ice cores. Through the natural carbon cycle:

  • People and animals (source) convert oxygen into carbon dioxide, released through respiration. Plants (sinks) absorb the CO2 and release oxygen back into the air.
  • Oceans both emit (source) and absorb (sink) carbon dioxide on the sea's surface.
  • Volcanic eruptions (source) emit carbon dioxide that has been trapped deep within the Earth. Again, plants and oceans (sinks) are the only natural means of removing this CO2 from the atmosphere.

Carbon Dioxide (CO2) - Heat-trapping gas that is two parts carbon and one part oxygen. Too much CO2 traps too much of the sun's heat in our atmosphere. And the excessive warming of our world inevitably leads to some destruction that is to the detriment of our planet and its inhabitants.

Carbon Footprint - The amount of carbon dioxide that your activities emit into the atmosphere.

Carbon Market - A system that treats emissions reductions as a commodity, through which participating members trade carbon credits.

Carbon Offsets - Also known as VER's (voluntary emission reductions), CRT's (carbon reduction tons) and ERT's (emission reduction tons). They represent an opportunity for anyone to support projects that reduce, avoid, destroy or sequester carbon dioxide through a voluntary carbon market.

Carbon Sink - Absorption of carbon dioxide. Carbon sinks include oceans, trees and plants.

Carbon Source - Sources of carbon dioxide. Natural carbon sources include people and animals, oceans and volcanic eruptions. Human-caused carbon sources include burning of fossil fuels; vehicle exhaust; deforestation; and manufacturing, construction and mining processes.

Emission Reduction Ton (ERT) - The reduction or removal from the atmosphere of one metric ton of carbon dioxide (CO2).

Greenhouse Gas Emissions - Gases that trap heat in the atmosphere. The principle greenhouse gases are carbon dioxide, methane, nitrous oxide and fluorinated gases.

Kyoto Protocol - An international treaty aimed at reducing worldwide greenhouse gas emissions. It is within the Kyoto Protocol that the term "carbon credit" was first introduced.

Offset Certificates - The paper permits issued for your purchase of carbon credits. Offset certificates should include a serial number unique to the offset, as well as total tonnage purchased, the verifier's name and signature, the project location, the owner's name and address, and a vintage date.

Performance Standard - Instead of limiting projects to those that would not be possible without the carbon market, the performance standard counts as offsets any reduction of energy that is below a certain benchmark. Yes, the project may be one that is environmentally-friendly, but it is one that would have happened anyway, regardless of carbon market support. For this reason, avoid offsets associated with the performance standard.

Permanent Offsets - Lasting or guaranteed to be replaced should losses occur. (one of four criteria to look for when purchasing carbon offsets)

Real Offsets - Carbon offsets that have already occurred. (one of four criteria to look for when purchasing carbon offsets)

Regulated Carbon Market - A carbon market in which its participants are legally required to cut their emissions.

Renewable Energy Credits (REC's) - Unlike a carbon offset that represents 1 ton of emission reductions, a renewable energy credit represents 1 MWh of energy generated by a renewable energy source, such as wind, solar and hydroelectric power.

Verifiable Offsets - Carbon offsets that can be quantified, monitored and verified. (one of four criteria to look for when purchasing carbon offsets)

Voluntary Carbon Market - A carbon market in which its participants are not legally required to cut their emissions, but choose to do so of their own accord.